Article 142 of the Saudi Companies Law
المادة 142 من نظام الشركات · الفصل الثالث: إدارة شركة المساهمة المبسطة
The article leaves the management of a simplified joint-stock company to its articles of association, gives management the widest powers, and binds the company by acts done in its name even beyond its authority, except against bad-faith dealers or those who know of the excess.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تحدد طريقة إدارة شركة المساهمة المبسطة في نظامها الأساس، ويجوز أن يتولى إدارتها رئيس أو مدير أو أكثر أو مجلس إدارة أو غير ذلك. ويُبين في نظام الشركة الأساس طريقة تعيين من يتولى إدارتها، وعزله، وحدود سلطاته وصلاحياته وطريقة عمله. وإذا خلا نظام الشركة الأساس من أحكام بهذا الخصوص، تولى المساهمون ذلك.
2- يكون لرئيس شركة المساهمة المبسطة أو مديرها أو مجلس إدارتها –بحسب الأحوال- أوسع السلطات في إدارة الشركة بما يحقق أغراضها، وذلك فيما عدا ما استثني بنص خاص في النظام أو نظام الشركة الأساس من أعمال أو تصرفات تدخل في اختصاص المساهمين، ويكون للرئيس أو المدير -في حدود اختصاصاته- أن يُفوض الغير في مباشرة عمل معين أو أكثر، ولمجلس الإدارة -في حدود اختصاصاته- أن يُفوض واحدًا أو أكثر من أعضائه أو من الغير في مباشرة عمل معين أو أكثر.
3- يمثل رئيس شركة المساهمة المبسطة أو مديرها أو رئيس مجلس إدارتها -بحسب الأحوال- الشركة أمام القضاء وهيئات التحكيم والغير، ويجوز أن يفوض غيره في تمثيلها إذا نص نظامها الأساس على ذلك.
4- تلتزم شركة المساهمة المبسطة بجميع الأعمال والتصرفات التي يجريها الرئيس أو المدير أو مجلس الإدارة -بحسب الأحوال- باسمها ولو كانت خارج اختصاصاته، إلا إذا كان من تعامل معه سيّئ النية أو كان يعلم أن تلك الأعمال والتصرفات خارج اختصاصاته.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 142 explained in plain English
This article gives the simplified joint-stock company great flexibility in organizing its management, while protecting those who deal with it.
1- The form of management
- The method of management is set in the articles of association: a chairman, one or more managers, a board of directors, or otherwise.
- The articles of association state the method of appointment and removal, the limits of powers and the way of working.
- If the articles of association are silent on this, the shareholders take charge of these matters.
2- Powers and delegation
- The chairman, manager or board of directors has the widest powers in managing the company to achieve its purposes, except what is excluded by a special provision in the law or in the articles of association for the shareholders' competence.
- The chairman or manager may, within their powers, delegate others for one or more specific acts, and the board of directors may delegate one or more of its members or others.
3- Representation
The company is represented before the courts, arbitration bodies and third parties by its chairman, manager or chairman of the board, as the case may be, who may delegate others to represent it if the articles of association so provide.
4- Protecting those who deal with the company
The company is bound by all acts and dealings that management carries out in its name even if they are outside its powers, unless the other party is acting in bad faith or knows they are outside its powers.
Article 143 makes the provisions on the liability of the board of a joint-stock company apply to whoever manages the simplified company. To organize management powers in the articles of association, it is advisable to consult a lawyer specializing in companies.
Practical example
The articles of association of a simplified joint-stock company in Jeddah provide that it is managed by a single manager, and that buying real estate requires the shareholders' approval. The manager bought a plot of land in the company's name without this approval, from a seller acting in good faith who did not know of this restriction. The company is bound by the contract toward the seller, because the exception is limited to a dealer acting in bad faith or one who knows the act is outside the manager's powers.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
Commercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
Albrahim Law Firm
- Labour & Employment Law
- Civil Litigation & Compensation
- Labour & Employment Law
- Criminal Law
Frequently asked questions about Article 142 of the Saudi Companies Law
Who manages a simplified joint-stock company?
The articles of association decide this. It may be a chairman, one or more managers, a board of directors or otherwise, and if they are silent the shareholders take charge.
Who represents the simplified company before the courts?
Its chairman, manager or chairman of the board, as the case may be, who may delegate others if the articles of association so provide.
Is the company bound by a manager's act that exceeds their powers?
Yes. It is bound by acts carried out in its name even if outside their powers, unless the other party acted in bad faith or knew they were outside their powers.
More articles on Simplified Joint Stock Company
- Article 138
The article provides that the joint-stock company provisions apply to the simplified joint-stock company where there is no special provision, except for listed articles, and gives its shareholders freedom to organize its structure in the articles of association.
1- تسري على شركة المساهمة المبسطة فيما لم يرد به نص خاص في هذا الباب، وبما يتفق مع طبيعتها، أحكام شركة المساهمة عدا المواد: (الحادية والستين)، و(الثالثة والستين
- Article 139
The article requires the articles of association to state the issued and paid-up capital of a simplified joint-stock company, allows an authorized capital, and does not apply to it the minimum capital set for a joint-stock company.
1- يحدد في نظام الشركة الأساس مقدار رأس مالها المصدر وقيمة المدفوع منه، ويجوز أن يُنص فيه على أن يكون لها رأس مال مصرح به. 2- لا يسري متطلب الحد الأدنى لرأس الم
- Article 140
The article sets out what the articles of association of a simplified joint-stock company must contain and the documents attached to the formation application.
1- يجب أن يشتمل النظام الأساس لشركة المساهمة المبسطة بصفة خاصة على البيانات الآتية: أ- اسم الشركة. ب- المركز الرئيس للشركة. ج- غرض الشركة. د- رأس مال الشركة الم
- Article 141
The article exempts in-kind contributions in a simplified joint-stock company from accredited valuation if they do not exceed half of the capital, requires it if they do, and makes founders or shareholders liable if valuation is not done or is departed from.
1- إذا قدمت حصص عينية عند تأسيس الشركة أو عند زيادة رأس مالها لا يتجاوز مجموع قيمتها (نصف) رأس مال الشركة، فلا يجب تقييمها من مقيم معتمد، ما لم يتفق المؤسسون أو
- Article 143
The article makes the provisions on the liability of the board of a joint-stock company apply to the chairman, manager or board of directors of a simplified joint-stock company, as the case may be.
تسري الأحكام الخاصة بمسؤولية مجلس إدارة شركة المساهمة على رئيس شركة المساهمة المبسطة أو مديرها أو مجلس إدارتها بحسب الأحوال.
- Article 144
The article makes the rule of Article 72 of the Companies Law apply to the chairman, manager or board of directors of a simplified joint-stock company, as the case may be.
يسري حكم المادة (الثانية والسبعين) من النظام على رئيس شركة المساهمة المبسطة أو مديرها أو مجلس إدارتها بحسب الأحوال.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.